The purchase and ownership of a home is likely the largest investment you will make in your lifetime, and naturally involves a lot of financial questions. The two most common questions follow. For more specific answers to your final questions, run your information through this mortgage calculator. http://www.exclusivemtg.ca/calculators/mortgage-loanThe first step in looking to purchase a home is discovering what you can afford. Your credit history and the amount of your income, debts, and your down payment determine the amount of a loan for which you can be approved.
How Much Can I Borrow?
Most lenders use a debt-to-income ratio to calculate the qualifying top amount. For example, a lender may tell you that your mortgage payment cannot be more than 28 percent of your montly income, and that your total monthly debt payment (including the mortgage payments) cannot exceed 36 percent of your monthly income. It is very important to sit down with your mortgage broker or financial institution to get a true idea of what you have to work with. This should involve providing them with income histories, credit access, and a realistic accounting of your monthly spending. This is not a 15 minute visit to a bank but rather an investment of time and effort to be sure there are no surprises along the way.
Am I better Off Renting?
If your financial situation is unstable or you have difficulty qualifying for a mortgage, you may wish to opt for renting rather than purchase. The decision to rent or buy involves many factors, but simple cost comparisons can be made to help arrive at an informed decision.
Purchase Costs:
Taxes
Lawyer/notary fees
Inspection fees
Moving costs
Ownership Costs
Interest
Property Taxes
Property Insurance
Mortgage Insurance, if applicable
Maintenance and Utilities
Selling Costs
Real Estate Commissions
Lawyer/notary fees
These must be weighed against the following benefits of buyer:
Appreciation (increase in home's value)
Control over your living space
Everyone's situation is different. Before getting caught up in looking at properties, ensure you are putting down a good foundation by being clear what option fits your current life circumstances and confirming you have the financial resources to pursue your goal at this time.